Oil and Gas Waste Rule 8 Modernization

Oil and Gas Waste Rule 8 Modernization

According to the Dallas Fed Energy Survey, nearly two-thirds of oil and gas executives said that they were concerned that increased Federal Regulation would make their business unprofitable. Here are some quotes.

• “The Administration has us in the crosshairs. I Believe their goal is to effectively shut down our industry.”
• “The oil and gas industry does not need government intervention. If there is a need to make changes, it should be done through transparency and incrementally over time with industry input. Rash federal decisions do not help an industry that’s already volatile.”

we need to get ahead of the EPA, if they make the decision to start the review process (which by rule they can do anytime) they will start the process with the end in mind, meaning that they will simply use the process as a reason to validate their decision.

Our industry, the same industry that helps feed and heal and increase the standard of living for billions of people throughout the world also creates a waste stream, but that “mess” represents an investment, it represents innovation, the dignity of work, and the ability to provide for one’s family. It’s this industry that has done so much for so many families across Texas and the US. We want to see it continue to adapt and thrive.

Purpose:

Recognition of advancements in drilling waste management practices in order to increase transparency, reduce associated liability, and generally modernize standards for Texas.

Background:

In 1980 Senator Lloyd Bentsen of Texas sponsored an amendment to the Resource Conservation and Recovery Act (RCRA) this amendment termed the “Bentsen Amendment” removed oil and gas waste from the more stringent Subtitle C “hazardous” standards. Through this exemption, control was given to the states as the primary authority in overseeing and regulating the management and disposal of oil and gas waste. However, as a part of RCRA, the EPA is required to review and where necessary revise regulations “not less than every three  years”. Meaning the exemption for oil and gas waste could be substantially changed should the EPA decide to review and revise its requirements.

• According to the TRRC the last major amendment to the statewide rule on drilling waste occurred more than 30 years ago in 1990, with minor changes in 2000 and 2013.

• Since these changes were made drilling in the State of Texas has increased by more than 3,000 wells per year on average.

• Over the last 20 years nearly every aspect of oil and gas has advanced and modernized into the industry we see today, however, the one facet that has yet to see substantial changes in is the management of waste generated by drilling. If the industry is to continue to thrive in the state and avoid federal intervention, modernization of drilling waste management is needed.

Rule 8 improvements would:

• A modernization of rule 8wouldRe-assert Texas State primacy in regulatory implementation and show Washington DC we know more about real clean energy than they do.
• Would prove that transparency and incentives, not mandates or bans work best.
• Would reduce liability for oil and gas operators related to drilling waste disposal.
• Would aid in minimizing the need for future cleanup and restoration of abandoned well sites.
• Would offset potential costs and provide incentives to operators who modernize their waste management practices.

What rule 8 improvements would NOT do:

• It would NOT ban or prohibit the use of onsite waste disposal when appropriate.

Specifics for how to improve rule 8:

Recommendations:

#1: Establish fair and consistent standards for all non-commercial disposal:

Onsite burial in pits and/or on-lease land applications is no longer the most economical or environmentally sound choice for management of E&P wastes. Furthermore, the current Rule should be updated to to strengthen environmental protection with respect to disposal of waste with high environmental risk against pollution of surface and subsurface water. If an operator chooses to bury their wastes at the wellsite or land apply such wastes on the surface, then permitting should become consistent with other methods of E&P management and disposal. We recommend the following revisions/additions to the existing Rule 8 related to wellsite/on-lease disposal activities:

Methods:

1. Eliminate permit by rule entirely for onsite burial or land application of low-chloride drilling fluids and other wastes (see §3.8(d)(3)(C), §3.8(d)(3)(D)). Currently, operators may permanently dispose of “low-chloride” wastes generated at the wellsite in onsite reserve pits/surface impoundments or land apply such wastes directly on the surface without a permit. The current Rule 8 does not (i) require specific testing before or after such wastes are placed in the pit or land applied to validate their “low chloride” classification, nor (ii) have a mechanism to track the volume or types of wastes ultimately buried onsite or land applied and (iii) does not require increased bonding with the RRC to offset long-term liability costs/risks. This should not be allowed in any update to Rule 8 and the use of any pit (or intent to land apply) should be supported by:

1. 1. an approved permit by the RRC
   2. formal offset landowner notice and direct surface owner consent (see below)
   3. more adequate bonding/financial security to offset long-term (including P&A) liability, among other considerations.

2. Operators should be required to provide written notice to all adjacent landowners and obtain direct surface owner written consent regarding:

1. 1. intent to utilize an on-site reserve pit or land application to permanently dispose of E&P waste generated at the well site, including the (i) estimated volume to be disposed, and (ii) types of wastes to be disposed of on location.
   2. a disclosure statement stating that there are other waste management/disposal options for such wastes at a location other than the wellsite.
   3. the landowner notice and signed landowner acknowledgement should become part of the permanent well file

3. Operator should record a document with the county clerk related to the land where the wellsite/on-lease disposal activity occurred or will occur. Such document should contain:

1. 1. a legal description of the precise pit located or area where E&P waste will be land applied; and
   2. the estimated volume and types of waste to be disposed of on the land

4. Prior (and at some point following, as applicable) to any land application of E&P wastes on or off-lease, operators should submit lab analytics from a representative sample validating conformity to pre-defined standards for the E&P waste material to be disposed of on the surface.

5. Increase siting distance requirements from any on-lease pit’s outermost perimeter boundary to water wells, residences, schools, churches, or hospitals.

#2: Enhance transparency and waste tracking for E&P wastes generated at the wellsite:

While third-party, commercial disposal operators are required to report the volumes, types and generators of the waste received at the commercial facility, the generators of the waste are not required to file any forms or records related to the waste material, including and especially if managed on the wellsite. This leaves massive gaps in information/data that identify how these wastes are managed as well as the location, types, and volume of the wastes disposed of, in the event they are not sent to a permitted commercial disposal facility. This should change going forward.

Methods:

1. Waste generators should, within six months of the completion of the drilling or workover of any permitted well,file with the Commission a (newly created) form, indicating:
2. 1. the waste types and volume of waste generated from drilling operations,
   2. the disposal method of such waste (e.g. burial in pit, land application, commercial disposal or recycling)
   3. if pit is utilized, the dimensions of such pit
   4. if managed onsite, when/if permit was issued, landowner notice received
   5. further certify that such disposal was conducted in accordance with applicable rules and regulations of the Railroad Commission.
   6. Such certification will become a part of the well’s permanent history.

#3: Raising the bar on commercial disposal permits:

Since 2010, there have been approximately ____ new commercial disposal permits awarded in the Permian Basin and Eagle Ford alone. While the added disposal capacity was necessary to meet unprecedented demand for proper and safe management of E&P wastes generated by associated drilling activity, certain disposal operators have been able to skirt around the several essential permitting and financial assurance rules. Without being adequately addressed by an updated Rule, the current construct poses unnecessary environmental risks and associated costs to the state.

Methods:

1. All facilities permitted to accept RCRA-exempt oil and gas wastes, including those utilizing a Class II injection well for slurry injection, should be required to maintain sufficient financial security, in the form of a bond or letter of credit, in an amount that is “equal to or greater than the maximum amount necessary to close the commercial facility, at any time during the life of the permit term in accordance with all applicable state laws”, as required by Statewide Rule 78.

2. 1. Prior to submitting financial security, the disposal operator should submit a closure cost estimate (CCE) for approval.
   2. Statewide Rule 78 (l) requires the determination of conditions that may require the State to reclaim the bond or letter of credit to pay for the “maximum amount necessary to close the commercial facility”. Accordingly, all assumptions necessary for the preparation of a closure cost estimate pursuant to Statewide Rule 78 (l) should be based on the worst-case scenario – and should account for all storage tanks and other above and below ground structures utilized to store, handle, treat and/or dispose of such oil and gas drilling wastes.
3. Upon formal submission of a Permit to Maintain and Use a Commercial Oil and Gas Waste Disposal Pit, as outlined in Rule 8 (d)(6)(C) (“Commercial Facility Permit Application”):

 

1. 1. the applying operator (“Surface Facility Applicant”) should submit a non-refundable permit application fee in an amount of the lesser of (i) $50,000 or (ii) 10% of the total estimated closure cost amount associated with the actual CCE submitted as part of the Commercial Facility Permit Application packet (“Non-Refundable Commercial Surface Waste Facility Fee”). For the avoidance of doubt, this fee would not be required unless and until a formal “Permit to Maintain and Use a Commercial Oil and Gas Waste Disposal Pit” is received by the Commission.

1. 2. Along with the Commercial Facility Permit Application, the Surface Facility Applicant should provide a statement of need, indicating the reasoning of necessity for an additional disposal facility in the specific market where the applicant is to serve (“Statement of Need”). As part of the Statement of Need, a Surface Facility Applicant should provide a map showing, within a 30-mile radius around the Surface Facility Applicant’s prospective facility, the (i) active commercial disposal facilities, and (ii) the oil and gas wells drilled within the previous 12-month period prior to such Commercial Facility Permit Application submission.

3. Increase siting distance requirements from any commercial facility’s outermost perimeter boundary to any water wells, residences, schools, churches, or hospitals (“Sensitive Receptors”).

Conclusion:

A combination of economic drivers and technological advancements have resulted in changes to the national energy landscape over the past two decades, including widespread adoption of hydraulic fracturing and directional drilling. These practices have significantly changed the velocity in which these wastes are generated, as well as the total volume and types of wastes generated during an oil and gas well’s life cycle. A new federal administration and its appointments at the U.S. Environmental Protection Agency (EPA) pose a threat to the federal